AT&T INC.

(T)

11-K
Annual report of employee stock purchase, savings and similar plans Filed on 06/17/2011 Filed Period 12/31/2010

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549 (Mark One) FORM 11-K x ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2010 OR TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission File Number:1-8610

A. Full title of the plan and the address of the plan, if different from that of the issuer named below:

AT&T PUERTO RICO RETIREMENT SAVINGS PLAN

B. Name of issuer of the securities held pursuant to the plan and the address of its principal executive office: AT&T INC. 208 S. Akard, Dallas, Texas 75202

AT&T SAVINGS PLAN AT&T RETIREMENT SAVINGS PLAN AT&T PUERTO RICO SAVINGS PLAN AT&T PUERTO RICO RETIREMENT SAVINGS PLAN Financial Statements, Supplemental Schedules and Exhibit Table of Contents Page Report of Independent Registered Public Accounting Firm Financial Statements: Statements of Net Assets Available for Benefits as of December 31, 2010 Statements of Net Assets Available for Benefits as of December 31, 2009 Statements of Changes in Net Assets Available for Benefits for the Year Ended December 31, 2010 Notes to Financial Statements Supplemental Schedules: Schedule H, Line 4(i) Schedules of Assets (Held at End of Year) as of December 31, 2010 2 8 Exhibit: 23 Consent of Independent Registered Public Accounting Firm 3 1 2 3 4 5 1

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To Plan Administrator of the AT&T Savings Plan, AT&T Retirement Savings Plan, AT&T Puerto Rico Savings Plan and AT&T Puerto Rico Retirement Savings Plan We have audited each of the accompanying statements of net assets available for benefits of the AT&T Savings Plan, AT&T Retirement Savings Plan, AT&T Puerto Rico Savings Plan and AT&T Puerto Rico Retirement Savings Plan (collectively referred to as the Plans) as of December 31, 2010 and 2009, and the related statement of changes in net assets available for benefits for each of the Plans for the year ended December 31, 2010. These financial statements are the responsibility of the Plans management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. We were not engaged to perform an audit of the Plans internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Plans internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements for each of the Plans referred to above present fairly, in all material respects, the net assets available for benefits for each of the Plans at December 31, 2010 and 2009, and the changes in their net assets available for benefits for the year ended December 31, 2010, in conformity with U.S. generally accepted accounting principles. Our audits were performed for the purpose of forming an opinion on the financial statements for each of the Plans taken as a whole. The accompanying supplemental schedules of assets (held at end of year) as of December 31, 2010, are presented for purposes of additional analysis and are not a required part of the financial statements but are supplementary information required by the Department of Labors Rules and Regulations for Reporting and Disclosure under the Employee Retirement Income Security Act of 1974, as amended. These supplemental schedules are the responsibility of the Plans management. The supplemental schedules have been subjected to auditing procedures applied in our audits of the financial statements for each of the Plans, and in our opinion, are fairly stated in all material respects in relation to the financial statements for each of the Plans taken as a whole.

Dallas, Texas June 17, 2011

1

/s/ Ernst & Young LLP

Statements of Net Assets Available For Benefits December 31, 2010 (Dollars in Thousands)

Assets Investment in AT&T Savings Plan Master Trust, at fair value (Note 4) Receivables: Notes receivable from participants Employer contribution receivable Participant contribution receivable Net assets reflecting investments at fair value Adjustment from fair value to contract value for fully benefit-responsive investment contracts Net Assets Available for Benefits See Notes to Financial Statements.

AT&T AT&T AT&T AT&T Puerto Savings Plan Retirement Savings Plan Puerto Rico Savings Plan Rico Retirement Savings Plan $21,582,410 $ 475,022 61 163 22,057,656 (242,945) $21,814,711 $ 580,462 54,645 1,265 2,325 638,697 (4,903) 633,794 $ $ 39,812 3,055 3 42,870 (507) 42,363 $ $ 5,911 897 29 55 6,892 (44) 6,848

Statements of Net Assets Available For Benefits December 31, 2009 (Dollars in Thousands) AT&T AT&T AT&T AT&T Puerto Retirement Puerto Rico Savings Plan Savings Plan Savings Plan Rico Retirement Savings Plan $ 19,499,212 $ 447,239 $ 14,812 $ 4,732 455,093 19,954,305 (102,825) $ 19,851,480 $ 43,814 491,053 (2,071) 488,982 $ 1,080 15,892 (89) 15,803 $ 714 5,446 (18) 5,428

Assets Investment in AT&T Savings Plan Master Trust, at fair value (Note 4) Notes receivable from participants Net assets reflecting investments at fair value Adjustment from fair value to contract value for fully benefit-responsive investment contracts Net Assets Available for Benefits See Notes to Financial Statements.
3

Statements of Changes in Net Assets Available For Benefits For the Year Ended December 31, 2010 (Dollars in Thousands) AT&T AT&T AT&T AT&T Puerto Puerto Rico Savings Plan Retirement Savings Plan Savings Plan Rico Retirement Savings Plan $ 19,851,480 $ 488,982 $ 15,803 $ 5,428

Net Assets Available for Benefits, December 31, 2009 Additions to Net Assets Contributions: Participant contributions Employer contributions Investment Income: Net income from investment in AT&T Savings Plan Master Trust Interest income on notes receivable from participants Total Additions Deductions from Net Assets Administrative Expenses Distributions Total Deductions Net increase before transfers Net transfers from affiliated plans (Note 1) Net Assets Available for Benefits, December 31, 2010 See Notes to Financial Statements.

823,902 374,075

81,649 48,142

2,349 1,502

803 537

2,185,953 24,071 3,408,001 8,851 1,457,872 1,466,723 1,941,278 21,953 $ 21,814,711 $

60,693 2,300 192,784 3,623 69,344 72,967 119,817 24,995 633,794 $

4,010 91 7,952 89 1,975 2,064 5,888 20,672 42,363 $

677 36 2,053 41 593 634 1,419 1 6,848

Notes to Financial Statements (Dollars in Thousands)

1.

Plan Descriptions

The following descriptions provide only general information. Detailed provisions covering participant eligibility, participant allotments from pay, participant withdrawals, participant loans, employer contributions and related vesting of contributions and plan expenses are provided in the plan texts and prospectuses. The AT&T Savings Plan, AT&T Retirement Saving Plan, AT&T Puerto Rico Savings Plan and AT&T Puerto Rico Retirement Savings Plan (collectively referred to as the Plans) are defined contribution plans and are subject to the provisions of the Employee Retirement Income Security Act of 1974, as amended (ERISA). The AT&T Savings Plan (ASP) was originally established by SBC Communications Inc. (SBC) to provide a convenient way for eligible management and certain non-management, non-collectively-bargained for employees of participating AT&T Inc. (AT&T or the Company) companies to save for retirement on a regular and long-term basis. In connection with the November 2005 merger of AT&T Corp. (ATTC), SBC changed its name to AT&T. The AT&T Retirement Savings Plan (ARSP) was originally established by BellSouth Corporation (BellSouth) to provide a convenient way for eligible nonmanagement and bargained for employees of participating BellSouth companies to save on a regular and long-term basis. In December 2006, BellSouth was acquired by AT&T. The AT&T Puerto Rico Savings Plan (ASP-PR) was originally established by ATTC to provide a convenient way for eligible management employees of participating ATTC companies to save on a regular and long-term basis. In November 2005, ATTC was acquired by AT&T, formerly SBC. The AT&T Puerto Rico Retirement Savings Plan (ARSP-PR) was originally established by AT&T to provide a convenient way for eligible employees of its Puerto Rico subsidiary, CCPR Services Inc., and certain affiliates, to save on a regular and long-term basis. All savings plans sponsored by AT&T allow for the transfer of participant balances between plans as participants transfer between positions within AT&T subsidiaries. Additionally, in 2010, AT&T amended the Plans to merge the participant account balances and assets of the Centennial Communications Corp. Retirement Investment Plan, effective on June 1, 2010 and November 16, 2010 and the Centennial PR Operations Corporation Retirement Investment Plan, effective on June 1, 2010, into the Plans, based on the eligibility provisions of each of the Plans. The Plans participate in the AT&T Savings Plan Master Trust (AT&T Master Trust) for certain participant investment fund options as described below. The AT&T Master Trust invests in the AT&T Savings Group Investment Trust (Group Trust) for the remaining participant investment fund options. The Bank of New York (BNY) Mellon Corporation (BNY Mellon) serves as trustee for both the AT&T Master Trust and Group Trust. With respect to the ASP-PR and ARSP-PR, BNY Mellon serves as a U.S. custodian pursuant to a custodian agreement and effective April 30, 2010, Oriental Financial Group serves as trustee for these two plans. Prior to April 30, 2010, Eurobank served as trustee for these two plans. Fidelity Investments Institutional Operations Company, Inc. (Fidelity) serves as record keeper for the Plans. During 2010, participants could invest their contributions in one or more of 11 funds in 1% increments: AT&T Total Return Bond Fund* AT&T U.S. Stock Fund* AT&T International Stock Fund* AT&T Stable Value Fund* AT&T Age-Based Asset Allocation Funds (based on retirement date)** Total U.S. Stock Market Index Fund**
1Not

Small and Mid-Sized U.S. Stock Index Fund** International Stock Index Fund** Large Cap U.S. Stock Index Fund** AT&T Shares Fund** Fidelity BrokerageLink**1

available in the ASP-PR and ARSP-PR * Investment fund option of the Group Trust. ** Investment fund option of the AT&T Master Trust.
5

Notes to Financial Statements (Continued) (Dollars in Thousands)

Participants contribute to the Plans through payroll allotments. The Company contributes to the Plans by matching the participants contributions based on the provisions of the respective plan. For the ASP, some matching contributions are made in the form of cash and are participant directed immediately upon allocation. The majority of Company matching contributions for the ASP and all Company matching contributions for the ARSP, ASP-PR and ARSP-PR are made solely in the form of shares of AT&Ts common stock held in an Employee Stock Ownership Plan (ESOP), which is a separate investment account of the Plans. Vested Company contributions made to the Plans that are invested in the ESOP can be immediately diversified into any of the fund options above. Dividends on shares in the AT&T Shares Fund and the ESOP can either be reinvested in the AT&T Shares Fund on a quarterly basis, or paid into a separate fund known as a Dividend Fund Account (DFA) for distribution at the end of the year. Interest earned on dividends held in the DFA purchases additional units of the AT&T Shares Fund in the participants account. During 2010, participants elected to receive the following dividend distributions, which are included in distributions on the statements of changes in net assets available for benefits. Plan ASP $ Dividend Distribution 3 6 , 3 6 9 4 8 9 ASPPR ARSPPR -

ARSP

Each participant is entitled to exercise voting rights attributable to the AT&T shares allocated to their account and is notified by the Company prior to the time that such rights may be exercised. Subject to the fiduciary provisions of ERISA, the trustee will not vote any allocated shares for which instructions have not been given by the participant. The trustee votes any unallocated shares in the same proportion as it votes those shares that were allocated to the extent the proportionate vote is consistent with the trustees fiduciary obligation under ERISA. Participants have the same voting rights in the event of a tender or exchange offer. Although it has not expressed any intent to do so, AT&T has the right under the Plans to discontinue its contributions at any time and to terminate the Plans subject to the provisions of ERISA. In the event that the Plans are terminated, subject to the conditions set forth by ERISA, the account balances of all participants shall be 100% vested. Administrative and Operating Expenses; Investment Manager Fees Except to the extent paid by the Company, all expenses incident to the administration and operation of the Plans are charged to participants, either directly to their accounts or through the investment funds offered under the Group Trust or AT&T Master Trust, in accordance with administrative procedures established by the plan administrator. Investment manager fees are charged through the investment funds. Expenses charged directly to participant accounts (e.g., recordkeeping, communications fees) are reflected as a periodic fee on the participant account statements. In addition, expenses and fees with respect to certain transactions and services (e.g., plan loan initiation fees) are charged directly to participants who incur them rather than to the Plans as a whole. 2. Accounting Policies

The accompanying financial statements were prepared in conformity with U.S. generally accepted accounting principles (GAAP), which require management to make estimates that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates. Distributions are recorded when paid. Investment Valuation and Income Recognition Investments are stated at fair value. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. See Note 3 for discussion of fair value measurements. Investments in securities traded on a national securities exchange are valued at the last reported sales price on the last business day of the year. If no sale was reported on that date, they are valued at the last reported bid price. Investments in securities not traded on a national securities exchange are valued using pricing models, quoted prices of securities with similar characteristics or discounted cash flows. Shares of registered investment companies are valued based on quoted market prices, which represent the net asset value of shares held at year-end. Over-the-counter (OTC) securities and government obligations are valued at the bid price or the average of the bid and asked price on the last business day of the year from published sources where available and, if not available, from other sources considered reliable. Depending on the types and contractual terms of OTC derivatives, fair value is measured using valuation techniques, such as Black-Scholes option pricing models, simulation models or a combination of various models.
6

Notes to Financial Statements (Continued) (Dollars in Thousands)

Common/collective trust funds and 103-12 investments entities (i.e., an investment entity that holds the assets of two or more plans which are not members of a related group of employee benefit plans) are valued at redemption values that represent the net asset values of units held at year-end. Publicly traded partnerships are valued using trades on a national securities exchange based on the last reported sales price on the last business day of the year. Investment contracts held by defined contribution plans are required to be reported at fair value. However, contract value is the relevant measurement attribute for that portion of the net assets available for benefits of a defined contribution plan attributable to fully benefit-responsive investment contracts because contract value is the amount participants would receive if they were to initiate permitted transactions under the terms of the Plans. The Group Trust invests in fully benefit-responsive guaranteed investment contracts (GICs) and synthetic investment contracts (Synthetic GICs). GICs are valued at fair value by discounting the associated cash flows of the investment based on current yields of similar instruments with comparable durations considering the creditworthiness of the issuer. The underlying investments of the Synthetic GICs are owned by the Group Trust and are comprised of common/collective trust funds, corporate bonds and notes, registered investment companies and government securities and are also valued as described above. The fair value of the wrapper contracts for the Synthetic GICs is determined using a market approach discounting methodology that incorporates the difference between current market level rates for contract level wrap fees and the wrap fee being charged. The difference is calculated as a dollar value and discounted by the prevailing interpolated swap rate as of period end. The contract value of the fully benefit-responsive investment contracts represents contributions plus earnings, less participant withdrawals and administrative expenses. Purchases and sales of securities are recorded as of the trade date. Realized gains and losses on sales of securities are determined on the basis of average cost. Interest earned on investments is recognized on the accrual basis. Dividend income is recognized on the ex-dividend date. Notes Receivable from Participants Notes receivable from participants represent participant loans that are recorded at their unpaid principal balance plus any accrued, but unpaid interest. Interest income on notes receivable from participants is recorded when it is earned. Related fees are recorded as administrative expenses and are expensed when they are incurred. No allowance for credit losses has been recorded as of December 31, 2010 or 2009. If a participant ceases to make loan repayments and the plan administrator deems the participant loan to be a distribution, the participant loan balance is reduced and a distribution is recorded. Recent Accounting Standards In January 2010, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update 2010-06, Improving Disclosures about Fair Value Measurements, (ASU 2010-06). ASU 2010-06 amended Accounting Standards Codification Topic 820, Fair Value Measurements and Disclosures, (ASC 820) to clarify certain existing fair value disclosures and require a number of additional disclosures. The guidance in ASU 2010-06 clarified that disclosures should be presented separately for each class of assets and liabilities measured at fair value and provided guidance on how to determine the appropriate classes of assets and liabilities to be presented. ASU 2010-06 also clarified the requirement for entities to disclose information about both the valuation techniques and inputs used in estimating Level 2 and Level 3 fair value measurements. In addition, ASU 2010-06 introduced new requirements to disclose the amounts (on a gross basis) and reasons for any significant transfers between Levels 1, 2 and 3 of the fair value hierarchy and present information regarding the purchases, sales, issuances and settlements of Level 3 assets and liabilities on a gross basis. With the exception of the requirement to present changes in Level 3 measurements on a gross basis, which is delayed until 2011, the guidance in ASU 2010-06 is effective for reporting periods beginning after December 15, 2009. Since ASU 2010-06 only affects fair value measurement disclosures, adoption of ASU 2010-06 did not affect on the Plans net assets available for benefits or its changes in net assets available for benefits. In September 2010, the FASB issued Accounting Standards Update 2010-25, Reporting Loans to Participants by Defined Contribution Pension Plans, (ASU 2010-25). ASU 2010-25 requires participant loans to be measured at their unpaid principal balance plus any accrued but unpaid interest and classified as notes receivable from participants. Previously, loans were measured at fair value and classified as investments. ASU 2010-25 is effective for fiscal years ending after December 15, 2010, and is required to be applied retrospectively. Adoption of ASU 2010-25 did not change the value of participant loans from the amount previously reported as of December 31, 2009. Participant loans have been reclassified from investments to notes receivable from participants as of December 31, 2009.
7

Notes to Financial Statements (Continued) (Dollars in Thousands)

In May 2011, the FASB issued Accounting Standards Update 2011-04, Amendments to Achieve Common Fair Value Measurements and Disclosure Requirements in U.S. GAAP and IFRSs, (ASU 2011-04). ASU 2011-04 amended ASC 820, to converge the fair value measurement guidance in GAAP and International Financial Reporting Standards (IFRSs). Some of the amendments clarify the application of existing fair value measurement requirements, while other amendments change a particular principle in ASC 820. In addition, ASU 2011-04 requires additional fair value disclosures. The amendments are to be applied prospectively and are effective for annual periods beginning after December 15, 2011. Plan management is currently evaluating the effect that the provisions of ASU 2011-04 will have on the Plans financial statements. 3. Fair Value Measurements

ASC 820 establishes a framework for measuring fair value. That framework provides a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). The three levels of the fair value hierarchy are described below: Level 1 Level 2 Inputs to the valuation methodology are unadjusted quoted prices for identical assets or liabilities in active markets that the Plans have the ability to access. Inputs to the valuation methodology include: Quoted prices for similar assets and liabilities in active markets; Quoted prices for identical or similar assets or liabilities in inactive markets; Inputs other than quoted market prices that are observable for the asset or liability; Inputs that are derived principally from or corroborated by observable market data by correlation or other means. If the asset or liability has a specified (contractual) term, the Level 2 input must be observable for substantially the full term of the asset or liability. Level 3 Inputs to the valuation methodology are unobservable and significant to the fair value measurement.

The assets or liabilitys fair value measurement level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement. Valuation techniques used must maximize the use of observable inputs and minimize the use of unobservable inputs. The valuation methodologies described in Note 2 may produce a fair value calculation that may not be indicative of net realizable value or reflective of future fair values. Furthermore, while the Plans management believes its valuation methods are appropriate and consistent with other market participants, the use of different methodologies or assumptions to determine the fair value of certain financial instruments could result in a different fair value measurement at the reporting date. There have been no changes in the methodologies used at December 31, 2010 and 2009.
8

Notes to Financial Statements (Continued) (Dollars in Thousands)

4.

Investments

The Plans held investments in the AT&T Master Trust (for certain investment fund options as disclosed in Note 1), and the AT&T Master Trust held an investment in the Group Trust as of December 31, 2010 and 2009, and for the year ended December 31, 2010. AT&T Savings Plan Master Trust Investments AT&T established the AT&T Master Trust to manage assets of pooled investment options among various AT&T sponsored employee benefit plans. Each participating plans interest in the investment fund options (i.e., separate accounts) of the AT&T Master Trust is based on account balances of the participants and their elected investment fund options. The AT&T Master Trust assets are allocated among the participating plans by assigning to each plan those transactions (primarily contributions, benefit payments, and expenses) that can be specifically identified, and by allocating investment income and administrative expenses related to the AT&T Master Trust on a daily basis based on each participants account balance within each investment fund option. The participating plans and ownership percentages of the AT&T Master Trust are listed below: December 31, 2009 2010 97.67% 97.17% 2.24% 2.62% 0.07% 0.18% 0.02% 0.03% 100.0% 100.0%

AT&T Savings Plan AT&T Retirement Savings Plan AT&T Puerto Rico Savings Plan AT&T Puerto Rico Retirement Savings Plan Total

The Plans percentage interest in each of the investment fund options within the AT&T Master Trust at December 31, 2010 is disclosed below: December 31, 2010 AT&T Savings Plan 99.135% 96.181% 97.042% 96.723% 98.340% 93.550% 99.499% 96.522% 99.117% 95.801% 98.307% 93.983% 93.456% 84.621% 54.205% 65.746% 98.932%
9

Total U.S. Stock Market Index Fund Large Cap U.S. Stock Index Fund Small and Mid-Sized U.S. Stock Index Fund International Stock Index Fund AT&T Shares Fund AT&T Age-Based Asset Allocation Funds: AT&T Age-Based Allocation 2000 Fund AT&T Age-Based Allocation 2005 Fund AT&T Age-Based Allocation 2010 Fund AT&T Age-Based Allocation 2015 Fund AT&T Age-Based Allocation 2020 Fund AT&T Age-Based Allocation 2025 Fund AT&T Age-Based Allocation 2030 Fund AT&T Age-Based Allocation 2035 Fund AT&T Age-Based Allocation 2040 Fund AT&T Age-Based Allocation 2045 Fund AT&T Age-Based Allocation 2050 Fund Fidelity BrokerageLink

AT&T Retirement Savings Plan 0.850% 3.634% 2.681% 3.041% 1.640% 6.218% 0.485% 3.371% 0.860% 3.965% 1.612% 5.719% 6.168% 14.518% 44.914% 33.552% 1.068%

AT&T Puerto Rico Savings Plan 0.012% 0.128% 0.231% 0.198% 0.017% 0.148% 0.010% 0.081% 0.022% 0.186% 0.079% 0.263% 0.333% 0.728% 0.535% 0.597% -

AT&T Puerto Rico Retirement Savings Plan 0.003% 0.057% 0.046% 0.038% 0.003% 0.084% 0.006% 0.026% 0.001% 0.048% 0.002% 0.035% 0.043% 0.133% 0.346% 0.105% -

Notes to Financial Statements (Continued) (Dollars in Thousands)

The Plans percentage interest in each of the investment fund options within the AT&T Master Trust at December 31, 2009 is disclosed below: December 31, 2009 AT&T Savings Plan 99.560% 96.289% 97.326% 96.942% 98.560% 93.094% 99.856% 96.665% 99.514% 95.870% 98.994% 94.389% 96.572% 85.857% 62.685% 73.360% 98.843% AT&T Retirement Savings Plan 0.437% 3.541% 2.502% 2.832% 1.425% 6.712% 0.138% 3.231% 0.481% 3.937% 0.972% 5.528% 3.382% 13.833% 36.947% 26.517% 1.157% AT&T Puerto Rico Savings Plan 0.113% 0.122% 0.185% 0.013% 0.102% 0.001% 0.073% 0.005% 0.144% 0.034% 0.051% 0.023% 0.196% 0.053% 0.003% AT&T Puerto Rico Retirement Savings Plan 0.003% 0.057% 0.051% 0.040% 0.001% 0.092% 0.005% 0.031% 0.049% 0.001% 0.032% 0.022% 0.115% 0.315% 0.120% -

Total U.S. Stock Market Index Fund Large Cap U.S. Stock Index Fund Small and Mid-Sized U.S. Stock Index Fund International Stock Index Fund AT&T Shares Fund AT&T age-based asset allocation funds: AT&T Age-Based Allocation 2000 Fund AT&T Age-Based Allocation 2005 Fund AT&T Age-Based Allocation 2010 Fund AT&T Age-Based Allocation 2015 Fund AT&T Age-Based Allocation 2020 Fund AT&T Age-Based Allocation 2025 Fund AT&T Age-Based Allocation 2030 Fund AT&T Age-Based Allocation 2035 Fund AT&T Age-Based Allocation 2040 Fund AT&T Age-Based Allocation 2045 Fund AT&T Age-Based Allocation 2050 Fund Fidelity BrokerageLink The financial position of the AT&T Master Trust was as follows:

Interest bearing cash AT&T common stock Common/collective trust funds Short-term investments Fidelity BrokerageLink: Registered investment companies Common stock Corporate debt instruments Government bonds Interest bearing cash Other Investment in Group Trust AT&T Master Trust investments, at fair value Net other assets and liabilities Adjustment from fair value to contract value for fully benefit-responsive investment contracts Net assets available for benefits

2010 7,960 3,990,359 7,232,658 9,038 1,017,792 223,091 1,856 1,557 143,098 54 9,590,518 22,217,981 (9,386) (248,399) 21,960,196

December 31, 2009 $ 6,291 3,612,637 6,029,823 12,063 906,251 168,495 1,060 1,274 127,076 11 9,108,208 19,973,189 (7,575) (105,004) 19,860,610

$ $

$ $

10

Notes to Financial Statements (Continued) (Dollars in Thousands)

Net Appreciation in Fair Value of AT&T Master Trust Investments and Total Investment Income for the year ended December 31, 2010: AT&T common stock Common/collective trust funds Short term investments Fidelity BrokerageLink: Registered investment companies Common stock Corporate debt instruments Government bonds Interest bearing cash Other Investment in Group Trust Total net appreciation in fair value of AT&T Master Trust Investments Investment interest income $ 2010 193,653 1,227,192 220 163,765 18,985 68 321 137 5 646,887 2,251,233 100

$ $

The following tables set forth by level, within the fair value hierarchy, the AT&T Master Trusts assets at fair value, excluding its investment in the Group Trust: AT&T Master Trust Assets at Fair Value as of December 31, 2010 Level 1 Level 2 Level 3 Total Interest bearing cash $ Blended equity and debt: Asset allocation funds1 U.S. equity securities: AT&T common stock Total U.S. stock market index fund2 Large cap U.S. stock index fund3 Small and mid-sized U.S. stock index fund4 International equity securities: International stock index fund5 Fidelity BrokerageLink: Registered investment companies Common stock Corporate debt instruments Government bonds Interest bearing cash Other Short-term investments $ Total assets at fair value 7,960 3,990,359 1,017,792 223,091 143,098 9,038 5,391,338 $ 2,114,123 382,039 2,544,283 1,298,312 893,901 1,856 1,557 54 7,236,125 $ $ 7,960 2,114,123 3,990,359 382,039 2,544,283 1,298,312 893,901 1,017,792 223,091 1,856 1,557 143,098 54 9,038 12,627,463

11

Notes to Financial Statements (Continued) (Dollars in Thousands)

AT&T Master Trust Assets at Fair Value as of December 31, 2009 Level 1 Level 2 Level 3 Total Interest bearing cash $ Blended equity and debt: Asset allocation funds1 U.S. equity securities: AT&T common stock Total U.S. stock market index fund2 Large cap U.S. stock index fund3 Small and mid-sized U.S. stock index fund4 International equity securities: International stock index fund5 Fidelity BrokerageLink: Registered investment companies Common stock Corporate debt instruments Government bonds Interest bearing cash Other Short-term investments $ Total assets at fair value 6,291 3,612,637 906,251 168,495 127,076 12,063 4,832,813 $ 1,700,741 302,781 2,282,746 932,150 811,405 1,060 1,274 11 6,032,168 $ $$ 6,291 1,700,741 3,612,637 302,781 2,282,746 932,150 811,405 906,251 168,495 1,060 1,274 127,076 11 12,063 10,864,981

1This category includes 11 common/collective trust funds also known as Aged-Based Asset Allocation Funds which are well diversified portfolios that adjust the mix of the various underlying investments over time. The change in allocation of investments is designed to move from a more aggressive investment strategy to a more conservative strategy through the projected retirement date and for a number of years thereafter. The year associated with the fund identification denotes the projected year of retirement of the participant selecting the fund. There are currently no redemption restrictions on these investments. The fair values of the investments in this category have been estimated using the net asset value per share. 2This

category includes a common/collective trust fund with an objective of providing investment results that approximate the overall performance of the common stocks included in the Dow Jones Wilshire 5000 Index. There are currently no redemption restrictions on this investment. The fair value of the investment in this category has been estimated using the net asset value per share.
3This

category includes a common/collective trust fund with an objective of providing investment results that approximate the overall performance of the common stocks included in the Standard and Poor's Composite Stock Price Index of 500 stocks (the S&P 500). There are currently no redemption restrictions on this investment. The fair value of the investment in this category has been estimated using the net asset value per share.

4This

category includes a common/collective trust fund with an objective of providing investment results that approximate the overall performance of the common stocks included in the Dow Jones Wilshire 4500 Index. There are currently no redemption restrictions on this investment. The fair value of the investment in this category has been estimated using the net asset value per share.
5This

category includes a common/collective trust fund with an objective of providing investment results that approximate the overall performance of the common stocks included in the All Country World Index ex U.S. Index. Except for a short-term trading fee applicable to certain participant transactions, there are currently no redemption restrictions on this investment. The fair value of the investment in this category has been estimated using the net asset value per share.
12

Notes to Financial Statements (Continued) (Dollars in Thousands)

AT&T Savings Group Investment Trust Investments AT&T established the Group Trust to manage assets of pooled investment options among various AT&T sponsored employee benefit trusts. Each participating trusts interest in the investment fund options (i.e., separate accounts) of the Group Trust is based on account balances of the participants and their elected investment fund options. The Group Trust assets are allocated among the participating plans by assigning to each trust those transactions (primarily contributions, distributions, and expenses) that can be specifically identified and by allocating investment income and administrative expenses to the individual plans on a daily basis based on each participants account balance within each investment fund option. The participating entities percentage interest of the Group Trust is listed below: 2010 86.6% 6.3% 7.1% 100.0% December 31, 2009 85.9% 6.6% 7.5% 100.0%

AT&T Savings Plan Master Trust (AT&T Master Trust) AT&T Savings Master Trust (Master Trust) BellSouth Savings and Security Plan Total

13

Notes to Financial Statements (Continued) (Dollars in Thousands)

The AT&T Master Trusts percentage interest in each of the investment fund options within the Group Trust is disclosed below as of December 31, 2010: AT&T Total Return Bond Fund $ 1,326,799 1,326,799 5,425 1,332,224 98.5% AT&T U.S. Stock Fund $ 815,433 1,378,536 (69) 3,676 36,762 69 71 2,234,478 (609) (71) 2,233,798 97.0% AT&T Inter-national Stock Fund $ 3,669 218,702 47,732 275,580 2,120 547,803 1,381 549,184 98.1% AT&T Stable Value Fund $ 545 27,223 36,594 3,311 3,264,699 614,215 81 3,468,987 15,609 7,431,264 (446,763) (311,368) 6,673,133 79.8% $

Interest bearing cash Common/collective trust funds 103-12 investment entities Equities Equities loaned Publicly traded partnerships Registered investment companies Investment contracts (at fair value): Guaranteed investment contracts Synthetic GICs: Interest bearing cash Corporate preferred stock Corporate and other bonds and notes Registered investment companies Futures Government securities Wrapper contracts Market value of securities on loan Collateral received for securities loaned Group Trust investments at fair value Unsettled trades and other Adjustment from fair value to contract value for fully benefit-responsive investment contracts Obligation to return collateral on loaned securities Group Trust net assets AT&T Master Trusts percentage ownership interest of investments

Group Trust 3,669 1,034,135 47,732 1,654,116 (69) 3,676 1,366,226 27,223 36,594 3,311 3,264,699 614,215 81 3,468,987 15,609 69 71 11,540,344 (440,566)

(311,368) (71) $ 10,788,339 86.6%

14

Notes to Financial Statements (Continued) (Dollars in Thousands)

The AT&T Master Trusts percentage interest in each of the investment fund options within the Group Trust is disclosed below as of December 31, 2009: AT&T Total Return Bond Fund $ 1,115,939 (8,735) 8,735 8,765 1,124,704 3,853 (8,914) 1,119,643 98.5% AT&T U.S. Stock Fund $ 59 555,780 1,509,879 (86,639) 3,245 40,042 86,639 88,311 2,197,316 (1,719) (89,817) 2,105,780 96.9% AT&T Inter-national Stock Fund $ 3,631 256,331 1,131 263,219 (5,511) 2,976 5,511 5,660 532,948 653 (5,757) 527,844 98.1% AT&T Stable Value Fund $ 461 9,842 28,986 19,469 3,213 2,868,793 (71,918) 262,154 2,253 64,171 3,682,357 (613,841) 9,724 685,759 688,669 7,640,092 (87,909) (132,112) (700,413) 6,719,658 79.5%

Interest bearing cash Common/collective trust funds Corporate and other bonds and notes Equities Equities loaned Publicly traded partnerships Registered investment companies Registered investment companies loaned Investment contracts (at fair value): Guaranteed investment contracts Synthetic GICs: Interest bearing cash Corporate preferred stock Corporate and other bonds and notes Corporate and other bonds and notes loaned Registered investment companies Futures Other investments Government securities Government securities loaned Wrapper contracts Market value of securities on loan Collateral received for securities loaned (held in common/ collective trust funds) Group Trust investments at fair value Unsettled trades and other Adjustment from fair value to contract value for fully benefitresponsive investment contracts Obligation to return collateral on loaned securities Group Trust net assets $ AT&T Master Trusts percentage ownership interest of investments

Group Trust $ 4,151 812,111 1,131 1,773,098 (92,150) 3,245 1,168,799 (8,735) 28,986 19,469 3,213 2,868,793 (71,918) 262,154 2,253 64,171 3,682,357 (613,841) 9,724 786,644 791,405 11,495,060 (85,122) (132,112) (804,901) $ 10,472,925 85.9%

15

Notes to Financial Statements (Continued) (Dollars in Thousands)

Net Appreciation (Depreciation) in Fair Value of Group Trust Investments and Total Investment Income for the year ended December 31, 2010 AT&T AT&T AT&T AT&T Total Return Inter-national Bond Fund U.S. Stock Fund Stock Fund Stable Value Fund Group Trust $ - $ - $ 64 $ - $ 64 134,382 3,365 137,747 7,732 7,732 157,663 29,914 187,577 (69) (69) 34,716 26 5 34,747 34,716 292,002 41,080 367,798 $ $ - $ 79,410 79,410 $ 46 $ 17,423 176 17,645 $ 2,223 $ 6,797 32 9,052 $ 230,556 $ 728 231,284 $ 232,825 103,630 936 337,391

Interest bearing cash Common/collective trust funds 103-12 investment entities Equities Publicly traded partnerships Registered investment companies Total net appreciation in fair value of Group Trust Investments Investment income: Interest Dividends Securities lending Total investment income of Group Trust Investments

16

Notes to Financial Statements (Continued) (Dollars in Thousands)

The following table sets forth by level, within the fair value hierarchy, the Group Trusts assets at fair value as of December 31, 2010: Group Trust Assets and Liabilities at Fair Value December 31, 2010 Level 1 Level 2 Level 3 Total $ 3,669 $ - $ - $ 3,669

Interest bearing cash U.S. equity securities: U.S. common stock: Large cap 910,941 910,941 Small cap 467,595 467,595 Common stock registered investment companies 36,762 36,762 U.S. common stock loaned (69) (69) Common/collective trusts1 815,433 815,433 Publicly traded partnerships 3,676 3,676 International equity securities: Common stock 271,343 271,343 Common stock registered investment companies 2,120 2,120 Common/collective trusts2 218,702 218,702 Preferred stock 4,237 4,237 103-12 investment entities3 47,732 47,732 Fixed income securities: Blackrock mutual fund 111,357 111,357 WAMCO mutual fund 378,428 378,428 PIMCO total return mutual fund 837,014 837,014 Stable Value Fund: Common stock registered investment companies 545 545 Guaranteed investment contracts 27,223 27,223 Synthetic GICs: Interest bearing cash 36,594 36,594 Corporate preferred stock 3,311 3,311 Corporate and other bonds and notes: U.S. corporate bonds and notes 1,417,533 1,417,533 International corporate bonds and notes 612,459 612,459 Asset-backed securities 619,982 619,982 Collateralized mortgage obligations 80,829 80,829 Commercial mortgage-backed securities 533,896 533,896 Short term investment funds - registered investment companies 614,215 614,215 Futures 81 81 Government securities: U.S government4 53,911 3,325,640 3,379,551 Municipals 59,528 59,528 Other 1,035 1,035 Non U.S government 28,873 28,873 Wrapper contracts 15,609 15,609 Market value of securities on loan: U.S. stock fund 69 69 Collateral received for securities loaned 71 71 Total assets and liabilities at fair value $ 3,788,712 $ 7,751,632 $ - $ 11,540,344 1The objective of these common/collective trust funds held in the AT&T U.S. Stock Fund is to deliver cost-effective, high-quality, active exposure to the large-capitalization U.S. equity market with close tracking of the Russell 3000 Index and to provide for liquidity. These common/collective trust funds have redemption restrictions limited to daily and monthly settlement. All of the common/collective trust funds are invested in either Large-cap or Midcap equities, with the majority being Large cap. The fair value of the investment in this category has been estimated using the net asset value per share.
17

Notes to Financial Statements (Continued) (Dollars in Thousands)

2The objective of these common/collective trust funds held in the AT&T International Stock Fund is to provide a diversified fund that seeks to provide returns in excess of the international markets as represented by the All Country World Index U.S. index. The common/collective trust funds have redemption restrictions limited to daily, weekly or monthly and participants may be subject to short-term trading fees related to certain transactions. All but one of these funds are invested in developed countries (i.e., developed: Europe, Japan, UK, Australia, etc.). The fair value of the investment in this category has been estimated using the net asset value per share. 3This

is an equity commingled fund that invests primarily in publically traded non-U.S. securities. The fair value of the investments in this category has been estimated using the net asset value per share reported by the fund manager. The fund is selected by AT&T, and AT&T determines the timing and amount of contributions/redemptions, redemptions occur at net asset value. This is an open ended fund with no fund maturity date. duration of U.S. governments securities is approximately 14 years.
18

4Average

Notes to Financial Statements (Continued) (Dollars in Thousands)

The following table sets forth by level, within the fair value hierarchy, the Group Trusts assets at fair value as of December 31, 2009: Group Trust Assets and Liabilities at Fair Value December 31, 2009 Level 1 Level 2 Level 3 Total $ 3,690 $ - $ - $ 3,690

Interest bearing cash U.S. equity securities: U.S. common stock 1,549,921 1,549,921 U.S. common stock loaned (86,639) (86,639) Common/collective trusts1 559,025 559,025 International equity securities: Common stock 266,195 266,195 Common stock loaned (5,511) (5,511) Common/collective trusts2 257,462 257,462 Fixed income securities: Blackrock mutual fund 102,951 102,951 WAMCO core mutual fund 291,592 291,592 PIMCO total return mutual fund 721,396 721,396 Total return bond fund - loaned (8,735) (8,735) Stable Value Fund: Interest bearing cash 461 461 U.S. common stock 9,842 9,842 Guaranteed investment contracts 28,986 28,986 Synthetic GICs: Interest bearing cash 19,469 19,469 Corporate preferred stock 3,213 3,213 Corporate and other bonds and notes: Asset-backed securities 606,757 606,757 Collateralized mortgage obligations 592,549 592,549 Commercial mortgage-backed securities 136,582 136,582 Other 1,532,905 1,532,905 Corporate and other bonds and notes loaned (71,918) (71,918) Registered investment companies 262,154 262,154 Futures 2,253 2,253 Other investments 64,171 64,171 Government securities 3,682,357 3,682,357 Government securities loaned (613,841) (613,841) Wrapper contracts 9,724 9,724 Market value of securities on loan: U.S. stock fund 86,639 86,639 International stock fund 5,511 5,511 Total return bond fund 8,735 8,735 Synthetic GICs: Corporate and other bonds and notes 71,918 71,918 Government securities 613,841 613,841 Collateral received for securities loaned3 791,405 791,405 $ 3,297,308 $ 8,197,752 $ - $ 11,495,060 Total assets and liabilities at fair value 1The objective of these common/collective trust fund held in the AT&T U.S. Stock Fund is to deliver cost-effective, high-quality, active exposure to the large-capitalization U.S. equity market with close tracking of the Dow Jones Wilshire 5000 and to provide for liquidity. These common/collective trust funds have redemption restrictions limited to daily and monthly settlement. All of the common/collective trust funds are invested in either Large-cap or Mid-cap equities, with the majority being Large cap. The fair value of the investment in this category has been estimated using the net asset value per share.
19

Notes to Financial Statements (Continued) (Dollars in Thousands)

2The objective of these common/collective trust funds held in the AT&T International Stock Fund is to provide a diversified fund that seeks to provide returns in excess of the international markets as represented by the All Country World Index ex U.S. index. The common/collective trust funds have redemption restrictions limited to weekly, semi-monthly or monthly and participants may be subject to short-term trading fees related to certain transactions. All but one of these funds are invested in developed countries (i.e., developed: Europe, Japan, UK, Australia, etc.). The fair value of the investment in this category has been estimated using the net asset value per share. 3 There were three collateral pools in which the Group Trust invested: 1) The Pooled Employee ASL Short Term Fund, 2) The Term Assets Liquidating Trust and 3) The ASL Short Term Fund - SIGMA (Liquidating Fund). The Pooled Employee ASL Short Term Fund consisted of liquid securities that could be redeemed on a one-day notice for return to borrowers immediately upon recall of loaned securities. There was $520,143 invested in this fund as of December 31, 2009. The Term Assets Liquidating Trust consisted of non-liquid securities that were performing but were intended to be held until maturity. Redemptions from this Trust were prohibited; however, the Plan could exit this Trust, receive a proportionate share of the securities, and then sell the assets. It was expected that over 93% of this pool would mature within 360 days. There was $267,282 invested in this fund as of December 31, 2009. The ASL Short Term Fund - SIGMA (Liquidating Fund) consisted of assets in default that were valued at $526. Lending income was reserved to offset the deficiency in this the Liquidating Fund. Redemptions from the Liquidating Fund were prohibited; however, the Plan could exit the Liquidating Fund, receive a proportionate share of the securities, and then sell the assets. There was $3,454 invested in noncash investments, such as U.S. government debt.

Derivative Financial Instruments In the normal course of operations, Group Trust assets and liabilities held in the AT&T Stable Value Fund (Stable Value Fund) may include derivative financial instruments (futures and foreign currency forward contracts). These instruments involve, in varying degrees, elements of credit and market volatility risks in excess of more traditional investment holdings such as equity and debt instruments. The contract or notional amounts disclosed provide a measure of the Group Trusts involvement in such instruments but are not indicative of potential loss. The intent is to use derivative financial instruments as an economic hedge to manage market volatility and foreign currency exchange rate risk associated with the Stable Value Funds investment assets. The Group Trusts fiduciaries do not anticipate any material adverse effect on the Group Trusts financial position resulting from its involvement in these instruments. The following table presents the effect of gains with respect to these derivative instruments, by type of derivative. The gains are located on the Statement of Changes in Net Assets Available for Benefits as Net Income from Investment in AT&T Savings Plan Master Trust to the extent of the Plans ownership in the AT&T Master Trust. Year Ended December 31, 2010 $ 81 $ 2,257

Futures contracts Forward foreign currency exchange rate contracts

Futures Contracts The primary risk managed by the Group Trust using futures contracts is the price risk associated with investments. On behalf of the AT&T Master Trust, investment managers enter into various futures contracts to economically hedge investments in domestic securities. These contracts, which are considered derivatives under Accounting Standards Codification Topic 815, Derivatives and Hedging, are agreements between two parties to buy or sell a security or financial interest at a set price on a future date and are standardized and exchange-traded. Upon entering into such a contract on behalf of the Group Trust, the investment manager is required to pledge to the broker an amount of cash or securities equal to the minimum initial margin requirements of the exchange on which the contract is traded. Pursuant to the contract, the investment manager agrees to receive from or pay to the broker an amount of cash equal to the daily fluctuation in the value of the contract. Such receipts or payments are known as variation margin and are recorded on a daily basis by the trustee as a realized gain or loss equal to the difference in the value of the contract between daily closing prices. Upon entering into such contracts, the Group Trust bears the risk of interest or exchange rates or securities prices moving unexpectedly, in which case, the Group Trust may not achieve the anticipated benefits of the futures contracts and may realize a loss. With futures, there is minimal counterparty credit risk to the Group Trust since futures are exchange traded and the exchanges clearinghouse, as counterparty to all exchange traded futures, guarantees the futures against default. The investments in the Group Trust are subject to interest rate risk. The U.S. interest rate futures held in the portfolio as of December 31, 2010 and 2009 were used primarily to hedge and manage the duration risk of the portfolio.
20

Notes to Financial Statements (Continued) (Dollars in Thousands)

The fair value of the open futures contracts is separately disclosed in the detail of the Group Trust investments presented below and are included in the Statement of Net Assets Available for Benefits to the extent of the Plans ownership in the A&T Master Trust. At December 31, 2010, open futures contracts held in the Group Trust were as follows: Type of Contract 90-Day EuroDollar Future U.S. Treasury Bond Future U.S. 10-Year Treasury Notes Future U.S. 5-Year Treasury Notes Future U.S. 2-Year Treasury Notes Future U.S Ultra Bond Future U.S. Treasury Bond Future U.S. 10-Year Treasury Notes Future U.S. 2-Year Treasury Notes Future U.S Ultra Bond Future Total At December 31, 2009, open futures contracts held in the Group Trust were as follows: Type of Contract 90-Day EuroDollar Future U.S. Treasury Bond Future U.S. 10-Year Treasury Notes Future U.S. 5-Year Treasury Notes Future U.S. 2-Year Treasury Notes Future U.S. 10-Year Treasury Notes Future U.S. 5-Year Treasury Notes Future U.S. 2-Year Treasury Notes Future Total Number of Contracts Buy/(Sell) (39) (295) (105) 57 (253) (243) 197 639 Expiration 6/2010 $ 3/2010 3/2010 3/2010 3/2010 3/2010 3/2010 3/2010 $ Notional Value Fair Value (9,684) $ (301) (34,036) 2,115 (12,123) 300 6,520 (101) (54,715) 285 (28,055) 1,067 22,533 (363) 138,194 (749) 28,634 $ 2,253 Number of Contracts Buy/(Sell) (405) (184) (151) 283 170 (12) (45) 195 402 (160) Expiration 3/2012 $ 3/2011 3/2011 3/2011 3/2011 3/2011 3/2011 3/2011 3/2011 3/2011 $ Notional Value Fair Value (100,288) $ (147) (22,471) 630 (18,186) (61) 33,314 (5) 37,214 (19) (1,525) 42 (5,496) 129 23,485 (770) 88,000 (57) (20,335) 339 13,712 $ 81

Foreign Currency Contracts The primary risks managed by the Group Trust using foreign currency contracts is the foreign currency exchange rate risk associated with the Group Trusts investments denominated in foreign currencies. On behalf of the Group Trust, investment managers enter into foreign currency forward contracts, which are agreements to exchange foreign currencies at a specified future date at a specified rate, the terms of which are not standardized on an exchange. These contracts are intended to minimize the effect of currency fluctuations on the performance of investments denominated in foreign currencies. Although in some cases, foreign currency forward contracts are used to express a view on the direction of a particular currency, risk arises both from the possible inability of the counterparties to meet the terms of the contracts (credit risk) and from movement in foreign currency exchange rates (market risk). Foreign currency forward contracts are entered into with major banks to minimize credit risk, and accordingly, no credit reserve has been established against these amounts. The contracts are recorded at fair value on the date the contract is entered into, which is typically zero. The fair value of the foreign currency contracts are disclosed in unsettled trades and other of the Group Trust and are included in the Statement of Net Assets Available for Benefits to the extent of the Plans ownership in the A&T Master Trust.
21

Notes to Financial Statements (Continued) (Dollars in Thousands)

As of December 31 2010 and 2009, the contracts held by the Group Trust were: Notional Value 2010 Derivative assets Derivative liabilities $ $ 105,795 105,795 $ $ 2009 118,767 118,767 $ $ Fair Value 2010 671 $ 408 $ 2009 (835) 846

Fully Benefit-Responsive Investment Contracts The Stable Value Fund consists of fully benefit-responsive investment contracts with various financial institutions and insurance companies, which can be accounted for by the plan at contract value. Generally contract value represents contributions made under the contract, plus earnings, less participant withdrawals and administrative expenses. The benefit-responsive investment contracts held by the Stable Value Fund as of December 31, 2010 include registered investment contracts, Traditional Guaranteed Investment Contracts (Traditional GICs or GICs) and Synthetic GICs. Synthetic GICs are constructed by combining a stable value insurance wrapper contract and a fixed income portfolio. The assets supporting the Synthetic GICs are owned by the Group Trust and generally consist of high quality fixed income securities. At December 31, 2010, the underlying net assets in the Stable Value Fund allocated to the AT&T Master Trust had a fair value of $5,571,570 and a contract value of $5,323,171. At December 31, 2009, the underlying net assets in the Stable Value Fund allocated to the AT&T Master Trust had a fair value of $5,446,265 and a contract value of $5,341,262. For the years ended December 31, 2010 and 2009, the average yield earned on these contracts was 2.41% and 3.05%, and the average yield earned by the AT&T Master Trust and the Plans, adjusted to reflect actual interest rate credited to participants, was 3.60% and 3.43%. No valuation reserves were recorded to adjust contract amounts as of December 31, 2010 or 2009. Traditional GICs are issued by insurance companies and typically pay a guaranteed fixed or floating rate of interest over the life of the contract with a repayment of principal at maturity. A Synthetic GIC is similar to a Traditional GIC but has unbundled the insurance and investment components of the Traditional GIC. Wrapper contracts are typically issued by a bank or insurance company, and seek to provide preservation of principal by permitting daily liquidity at contract value for participant directed transactions, in accordance with the provisions of the Plans. Wrapper contracts amortize the realized and unrealized gains and losses on the underlying fixed income investments through adjustments to the future interest crediting rate of the contract. Wrapper contracts typically contain contractual provisions that prevent the interest crediting rate from falling below zero. The fair value of the wrapper contracts for the Group Trust was $15,609 and $9,724 at December 31, 2010 and 2009. Wrapper contracts interest crediting rates are typically reset on a monthly or quarterly basis and are based on the characteristics of the underlying fixed income securities. Other key factors that influence the interest crediting rates are market interest rates, the amount and timing of participant transactions into and out of the wrapper contract, investment returns on the underlying fixed income securities, the duration of those investments, and the default or credit failure of any of the securities. In some instances, the default or credit failure of a security could result in the reduction of contract value, and a loss of principal would be realized by the Stable Value Fund. Changes in market interest rates can affect the yield to maturity and the market value of the underlying investment, and can have a material impact on the wrapper contracts interest crediting rate. Additionally, participant withdrawals and transfers from the Stable Value Fund are paid at contract value but funded through the market value liquidation of the underlying investments, which also impacts the interest crediting rate. The resulting gains and losses in the market value of the underlying investments relative to the wrapper contract value are represented on the Plans statement of net assets available for benefits as the Adjustment from fair value to contract value for fully benefit-responsive investment contracts, and the amount allocated to the AT&T Master Trust totaled $(248,399) at December 31, 2010 and $(105,004) at December 31, 2009. If this adjustment is positive, it indicates that the wrapper contract value is greater than the market value of the underlying investments and the embedded market value losses will be amortized in the future through a lower interest crediting rate. If the adjustment is negative, the embedded market gains would cause the future interest crediting rate to be higher.
22

Notes to Financial Statements (Continued) (Dollars in Thousands)

In certain circumstances, the amount withdrawn from the wrapper contract could be payable at fair value rather than at contract value. These events include termination of the Plans, a material adverse change to the provisions of the Plans, if AT&T elects to withdraw from a wrapper contract in order to switch to a different investment provider or, in the event of a spin-off or sale of a division, if the terms of the successor plan do not meet the contract issuers underwriting criteria for issuance of a clone wrapper contract. Events that would permit a wrapper contract issuer to terminate a wrapper contract upon short notice include the Plans loss of qualified status, un-cured material breaches of responsibilities or material and adverse changes to the provisions of the Plans. The Company does not believe any of the events are probable of occurring in the foreseeable future. Securities Lending The Group Trust is authorized to engage in the lending of certain assets. Securities lending is an investment management enhancement that utilizes the existing securities of the Group Trust to earn additional income. Securities lending involves the loaning of securities to a selected group of approved banks and broker-dealers. In return for the loaned securities, the trustee, prior to or simultaneous with delivery of the loaned securities to the borrower, receives collateral in the form of cash or U.S. government securities as a safeguard against possible default of any borrower on the return of the loan under terms that permit the Group Trust to repledge or sell the securities. Each loan is initially collateralized, in the case of: (a) loaned securities denominated in U.S. dollars or whose primary trading market is located in the U.S. to the extent of 102% of the market value of the loaned securities, or (b) loaned securities not denominated in U.S. dollars or whose primary trading market is not located in the U.S. to the extent of 105% of the market value of the loaned securities. The collateral is marked to market on a daily basis. The Group Trust elected to cease securities lending activity in 2010. All loans were returned to the Group Trust and all collateral was returned to the borrowers in early 2011. The fair value of securities on loan was $69 and $786,644 as of December 31, 2010 and 2009, and the value of collateral held was $71 and $791,405 at December 31, 2010 and 2009. The reported collateral at December 31, 2010, did not include noncash holdings. The collateral is invested in equities (classified as Level 1). Income earned on securities lending is used to offset administrative expenses and was $936 for the year ended December 31, 2010. Investment Risk Investments held by the Group Trust and the AT&T Master Trust are exposed to various risks, such as interest rate, market and credit risks. Due to the level of risk associated with certain investments, it is at least reasonably possible that changes in the values of investments could occur in the near term and that such changes could materially affect participants account balances and the amounts reported in the statements of net assets available for benefits. Participants accounts that are invested in the Company stock fund option are exposed to market risk in the event of a significant decline in the value of AT&T stock. Additionally, the Group Trust invests in securities with contractual cash flows, such as asset backed securities, collateralized mortgage obligations and commercial mortgage-backed securities, including securities backed by subprime mortgage loans. The value, liquidity and related income of these securities are sensitive to changes in economic conditions, including real estate value, delinquencies or defaults, or both, and may be adversely affected by shifts in the markets perception of the issuers and changes in interest rates. 5. Related Party Transactions

The assets of the Plans are invested in AT&T stock either through the Group Trust or AT&T Master Trust. Because the Company is the plan sponsor of the Plans, transactions involving the Companys stock qualify as party-in-interest transactions. In addition, certain investments held by the Plans, Group Trust and AT&T Master Trust are managed by BNY Mellon and Fidelity as trustee and record keeper, respectively, as defined by various agreements. In addition, certain investments were managed by State Street and Fidelity as trustee and record keeper as defined by various agreements. Therefore, these transactions and fees paid to these entities qualify as parties-in-interest transactions. All of these transactions are exempt from the prohibited transactions rules.
23

Notes to Financial Statements (Continued) (Dollars in Thousands)

6.

Tax Status

The ASP has received a determination letter from the Internal Revenue Service (IRS) dated August 20, 2009, stating that the Plan is qualified under Section 401(a) of the Internal Revenue Code (IRC) and, therefore, the related trust is exempt from taxation. Subsequent to this determination by the IRS, the ASP was amended. Once qualified, the ASP is required to operate in conformity with the IRC to maintain its qualification. The plan administrator believes the ASP is being operated in compliance with the applicable requirements of the IRC and, therefore, believes that the ASP, as amended, is qualified and the related trust is tax exempt. The ARSP has received a determination letter from the IRS dated August 6, 2002, stating that the ARSP is qualified under Section 401(a) of the IRC and, therefore, the related trust is exempt from taxation. Subsequent to this determination by the IRS, the ARSP was amended. Once qualified, the ARSP is required to operate in conformity with the IRC to maintain its qualification. The plan administrator believes the ARSP is being operated in compliance with the applicable requirements of the IRC and, therefore, believes that the Plan, as amended and restated, is qualified and the related trust is tax exempt. In addition, the ARSP was filed with the IRS for a new favorable determination letter on February 2, 2009 pursuant to, and as a part of, the IRS determination letter filing program (Cycle C) and that request is still pending. The ASP-PR has received a determination letter from the Commonwealth of Puerto Ricos Department of Treasury (Treasury) dated December 30, 2010, stating that the ASP-PR is qualified under Sections 1165(a) and 1165(e) of the Puerto Rico Internal Revenue Code of 1994 (the Puerto Rico Code) and, therefore, the related trust is exempt from taxation. Subsequent to this determination by the Treasury, the ASP-PR was amended. Once qualified, the ASP-PR is required to operate in conformity with the Puerto Rico Code to maintain its qualification. The plan administrator believes the ASP-PR is being operated in compliance with the applicable requirements of the Puerto Rico Code and, therefore, believes that the ASP-PR, as amended, is qualified and the related trust is tax exempt. The ARSP-PR has received a determination letter from the Commonwealth of Puerto Ricos Department of Treasury (Treasury) dated December 1, 2010, stating that the ARSP-PR is qualified under Sections 1165(a) and 1165(e) of the Puerto Rico Code and, therefore, the related trust is exempt from taxation. Subsequent to this determination by the Treasury, the ARSP-PR was amended. Once qualified, the ARSP-PR is required to operate in conformity with the Puerto Rico Code to maintain its qualification. The plan administrator believes the ARSP-PR is being operated in compliance with the applicable requirements of the Puerto Rico Code and, therefore, believes that the ARSP-PR, as amended, is qualified and the related trust is tax exempt. Accounting principles generally accepted in the United States require Plan management to evaluate uncertain tax positions taken by the Plans. The financial statement effects of a tax position are recognized when the position is more likely than not, based on the technical merits, to be sustained upon examination by the IRS or Treasury. The Plans administrator has analyzed the tax positions taken by the Plans, and has concluded that as of December 31, 2010, there were no uncertain positions taken or expected to be taken. The Plans have recognized no interest or penalties related to uncertain tax positions. The Plans are subject to routine audits by taxing jurisdictions; however, there are currently no audits for any tax periods in progress. The Plans administrator believes they are no longer subject to income tax examinations for years prior to 2007.
24

Notes to Financial Statements (Continued) (Dollars in Thousands)

7.

Reconciliation of Financial Statements to Form 5500

The following is a reconciliation of Net Assets Available for Benefits per the financial statements to the Form 5500 as of December 31, 2010: AT&T AT&T AT&T AT&T Puerto Retirement Puerto Rico Savings Plan Savings Plan Savings Plan Rico Retirement Savings Plan $ 21,814,711 $ 633,794 $ 42,363 $ 6,848 242,945 (4,899) $ 22,052,757 $ 4,903 (35) 638,662 $ 507 42,870 $ 44 6,892

Net Assets Available for Benefits per the financial statements Adjustment from contract value to fair value for fully benefit-responsive investment contracts Distributions payable to participants Net Assets Available for Benefits per the Form 5500

The following is a reconciliation of Net Assets Available for Benefits per the financial statements to the Form 5500 as of December 31, 2009: AT&T AT&T AT&T Retirement Puerto Rico AT&T Puerto Savings Plan Savings Plan Savings Plan Rico Retirement Savings Plan $ 19,851,480 $ 488,982 $ 15,803 $ 5,428 102,825 (1,571) $ 19,952,734 $ 2,071 491,053 $ 89 15,892 $ 18 5,446

Net Assets Available for Benefits per the financial statements Adjustment from contract value to fair value for fully benefit-responsive investment contracts Distributions payable to participants Net Assets Available for Benefits per the Form 5500

Distributions payable to participants are recorded on the Form 5500 for benefit claims that have been processed and approved for payment prior to December 31, but not yet paid as of that date. The following is a reconciliation of distributions to participants per the financial statements to the Form 5500 for the year ended December 31, 2010: AT&T Savings Plan $ 1,457,872 4,899 (1,571) $ 1,461,200 AT&T AT&T Retirement Puerto Rico AT&T Puerto Savings Plan Savings Plan Rico Retirement Savings Plan $ 69,344 $ 1,975 $ 593 35 $ 69,379 $ 1,975 $ 593

Distributions to participants per the financial statements Distributions payable to participants at December 31, 2010 Distributions payable to participants at December 31, 2009 Distributions to participants per the Form 5500

25

Notes to Financial Statements (Continued) (Dollars in Thousands)

Fully benefit-responsive contracts are recorded on the Form 5500 at fair value versus contract value on the financial statements. The following is a reconciliation of total additions per the financial statements to total income per the Form 5500 for the year ended December 31, 2010: AT&T AT&T AT&T AT&T Puerto Retirement Puerto Rico Savings Plan Savings Plan Savings Plan Rico Retirement Savings Plan $ 3,408,001 $ 192,784 $ 7,952 $ 2,053 242,945 $ (102,825) 3,548,121 $ 4,903 (2,071) 195,616 $ 507 (89) 8,370 $ 44 (18) 2,079

Total additions per the financial statements Adjustment from contract value to fair value for fully benefit-responsive investment contracts at December 31, 2010 Adjustment from contract value to fair value for fully benefit-responsive investment contracts at December 31, 2009 Total income per the Form 5500

26

Notes to Financial Statements (Continued) (Dollars in Thousands)

8.

Nonparticipant-Directed Investments

The ESOP component of the Plans is held as a separate account under the AT&T Master Trust. The participating plans and ownership percentages of the ESOP are listed below: December 31, 2009 2010 AT&T Savings Plan 95.10% 97.44% AT&T Retirement Savings Plan 4.73% 2.49% AT&T Puerto Rico Savings Plan 0.12% 0.04% AT&T Puerto Rico Retirement Savings Plan 0.05% 0.03% Total 100.0% 100.0% Information about the net assets and the significant components of the changes in net assets relating to the nonparticipant-directed investments as of December 31 was as follows: 2010 Assets AT&T common stock Temporary cash investments Receivable for investments sold Other receivables Total Assets Liabilities Payable for investments purchased Total Liabilities Net Assets Available for Benefits* *A portion of these amounts include participant and nonparticipant-directed investments. 2010 Net Assets Available for Benefits, December 31, 2009* Transfers from other funds Net appreciation in fair value of common stock Administrative expenses Transfers to other funds $ 1,616,999 427,440 100,374 (227) (226,733) 300,854 $ 1,917,853 $ 1,914,413 $ 3,364 844 1,918,621 768 768 1,917,853 $ 2009 1,614,044 1,798 1,167 1 1,617,010 11 11 1,616,999

Net Assets Available for Benefits, December 31, 2010* *A portion of these amounts include participant and nonparticipant-directed investments.

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SCHEDULE H, LINE 4(i) - SCHEDULE OF ASSETS (HELD AT END OF YEAR) December 31, 2010 (Dollars in Thousands) AT&T SAVINGS PLAN EIN 43-1301883, PLAN NO. 002 Identity of Issue Loan Fund Loans to Plan participants * TOTAL * Party-in-Interest. AT&T RETIREMENT SAVINGS PLAN EIN 43-1301883, PLAN NO. 009 Identity of Issue Loan Fund Loans to Plan Participants * TOTAL * Party-in-Interest. AT&T PUERTO RICO SAVINGS PLAN EIN 43-1301883, PLAN NO. 010 Identity of Issue Loan Fund Loans to Plan Participants * TOTAL * Party-in-Interest. AT&T PUERTO RICO RETIREMENT SAVINGS PLAN EIN 43-1301883, PLAN NO. 011 Description of Investment 4.25% - 9.25% $ $ Description of Investment 3.25% - 9.25% $ $ Current Value 3,055 3,055 Description of Investment 4% -10.5% $ $ Current Value 54,645 54,645 Description of Investment 3.25% -11.0% $ $ Current Value 475,022 475,022

Identity of Issue Loan Fund Loans to Plan Participants * TOTAL * Party-in-Interest.

Current Value 897 897

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SIGNATURE Pursuant to the requirements of the Securities Exchange Act of 1934, the trustee (or other persons who administer the employee benefit plan) has duly caused this annual report to be signed by the undersigned thereunto duly authorized.

AT&T Puerto Rico Retirement Savings Plan By AT&T Services, Inc., Plan Administrator for the Foregoing Plans

/s/ Paul W. Stephens

B y Paul W. Stephens Senior Vice President and Controller

Date: June 17, 2011

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EXHIBIT INDEX Exhibit identified below, Exhibit 23 is filed herein as an exhibit hereto. Exhibit Number 23 Consent of Independent Registered Public Accounting Firm

30

EX 23 Form 11-K for 2010 File No. l-8610

Consent of Independent Registered Public Accounting Firm We consent to the incorporation by reference in the Registration Statement (Form S-8, No. 333-173078) pertaining to the AT&T Puerto Rico Retirement Savings Plan of our report dated June 17, 2011, with respect to the financial statements and schedule of the AT&T Puerto Rico Retirement Savings Plan included in this Annual Report (Form 11-K) for the year ended December 31, 2010.

/s/ Ernst & Young LLP Dallas, Texas June 17, 2011